AbitibiBowater to Sell Texas Paper Mill

AbitibiBowater is reviewing the possible sale of its Lufkin, TX mill to CIT for $20.5 million. The plant has been closed since Dec. 2007 and consists of 895.5 acres of land, suitable for industrial development. The sale would save AbitibiBowater $3 million a year and would protect them from any environmental liability, which would be assumed by CIT.

Update on Uncoated Woodfree Papers

Although the majors (incl Domtar, IP, Glatfelter, GP and Boise ) all announced a $40/ton price increase for uncoated freesheet grades (all except business papers) the reality is the price is just being implemented. A quick check of the market, 50-lb offset roll prices range from $805-835/ton and cutsize grades range from $1010-1060/ton.
The market is in an interesting position, pulp prices are up, demand is OK at best, inventories are low (due to curtailments), BUT, Portical has a monster of a paper machine with tons to sell. See more on the Coy Paper site under the tab for Industry Resources and news.

Coated Market Trying to Improve Price

Several of the the major producers of publication grades, NewPage, Myllykoski and Verso Paper, are working hard with end users to increase the price of their products by reducing discounts. However, Coated Groundwood list prices in September remained flat at $770/ton. Buyers continue to report overall demand remains weak and producers continue to take downtime.

A recent survey of manufacturers of coated Groundwood publication papers revealed shipments were down 8% for 315,000 tons (vs. 2008) for the month of August. Meanwhile, the producers of Coated Freesheet reported shipments were 300,000 tons or down 17% (vs. 2008) during August.

Containerboard Shipments take Slight Drop

The Containerboard producers saw a slight decline in September and prices also fell by $10-20/ton. This is consistent with declines in recent months. We have reported on box shipments falling most of the year; August shipments continued the decline with 9.5% decrease from 2008 (Nearly 10%YTD so far 2009).
Spot prices on 42-lb unbleached kraftliner for Midwestern converters is in $450-470/ton range, and Northeast as well as West Coat is in the $420-440/ton range.
Some buyers report the small recycled mills as low as mid-$300/ton levels.

Paper Market Recap for August Shipments

Deutsche Bank just reported August and year to date paper shipments for printing & writing papers from North American producers.:
Uncoated Free Sheet, -10.8%YTD / -14.1%(August),
Light Weight Coated groundwood publication -8.2%YTD / -28.0% (August)
Coated Free Sheet -14.4%YTD / 25.1%(August)

Another Uncoated Paper Machine Announced for China

Hamadan Baiyun Paper announced they will build a 280,000 TPA uncoated printing/writing Paper machine in China, slated to start up in March 2011. They also plan a new 100,000 TPA pulp line. This mill has current production of 7 small with uncoated machines that produce capacity of 100,000 TPA and a 37,000TPA pulp line.

Pulp Inventory Down, Shipments Up

The pulp market enjoyed shipments of 3.6Million tons for August, which is a 13% gain (vs. August 2008). Inventory levels at the producing pulp mills were down to 27 days supply, versus 41 days in August of 2008. Of particular note was Chinese shipments increased 23% from July to 830,000 tons – up 132% from 2008!

More on the Antidumping Charges for Coated Paper

The USA producers of coated paper, NewPage, Appleton, and SAPPI, continued to charge China and Indonesia on specific printing and writing coated papers. Recall we reported on similar charges against these countries in 2007 and the International Trade Commission ruled against the charges.

Cascades Acquires two More Recycling Plants

Cascades announced the purchase of Sonoco Recycling and Yorkshire Paper Corp. Both of these companies provide on-site collection for retailers recyclable materials such as corrugated containers, paper and plastics. Yorkshire collects nearly 24,000 tons from retailers in New York and New England and Sononco collects 190,000 tons across Canada.
Cascades now has 19 recovery facilities supplying the company with half of the 2.2Million tons Cascades processes in their paper making process.

USA Containerboard Shipments Down

Production for the USA containerbroad producers fell nearly 10% in August (vs. August of 2008) and July shipments appeared flat (vs July 2008). The AF&PA reported containerbroad production this year is down over 12% (vs 2008 YTD). Components of this market were also down - Linerbaord down 12% and Medium fell 13% (vs 2008 YTD).

Will Imports Harm USA Paper Producers

As of today, I know of no USA producers in discussions for building a new uncoated paper machine and increasing capacity. Meanwhile, Portucel is ramping up production in Portugal and eyeing the North American market. Also, South America is introducing new capacity and surely the USA will be in their marketing plans. Unless demand in North America increases, this new supply could yield a sloppy uncoated freesheet market for years to come.

Coupons Making a Comeback ?

Paper ‘cents off’ coupons have been around for 100 years, and although redemption peaked in 1992 at 7.9Billion coupons, by 2006 through 2008 the redemption fell to 2.6Billion a year. However, with the current recession, marketers believe coupons are growing again. Initial reports indicate redemption is up 10% during the fourth quarter of 2008 and they increased nearly 25% so far in 2009. In the past, newspapers served as the primary source for coupons, now websites such as coupons.com offer printable versions and several sites allow the end user to customize exactly which stores or items to alert end users as to what is on sale. The next frontier is thought to be mobile coupons, forwarded to the smart phone. The New York Times reported the bulk of coupons are still clipped from weekend newspapers and digital coupons accounted for less than half of one percent. Let’s hope the newspapers can hold on to this... declining coupons from newspapers means decreased newsprint consumption and one more reason for the end user to not buy a newspaper!

No Challenges to Recent Pulp Prices

Snap Report from Paper Association -
Pulp price increases announced throughout the world, effective with October shipments: Arauco of Chile to increase prices in China on 3 grades of pulp, Donghae Pulp of S. Korea to raise BHK in China, Canfor Pulp to raise NBSK in NA and Asia, Domtar to raise NBSK in NA, Sodra and Fibria to raise NBSK in Europe

China Boosts Paper Production

Chinese paper production was over 50 million tons (up 6.2%) for the first half of 2009. Several closed mills re-opened with a reviving economy yielding increased demand, and low cost raw materials. Note, China imports approximately 60% of their pulp (8.25 million tons) up 40% vs. last year.

Coy Paper and Vallely Blog on Twitter

All the news releases P. Scott Vallely reports on in the Current News on the Pulp and Paper Industry can be found with daily updates on Twitter. Click onto https://twitter.com/CoyPaper. Many of the releases are documented before they become public information. The twitter updates are convenience 140 character summers of each release and come right to your computer. The releases can also be found on the Coy Paper Web site at http://coypaper.com and click onto the industry resources tab. Also, an RSS feed is available. Happy reading. Would enjoy hearing some feedback.

Catalyst Paper in Talks to Restart Elk Falls Mill

Catalyst is in the middle of presenting a plan to restart production at the Elk Falls paper mill in British Columbia. The proposal is to start up at least 2 paper machines and begin a profit sharing system based on earnings in return for changes to wages and benefits. Elk Falls was shut in early February.

Will USA Manufacturing Ever Come Back?

Scary thought surrounding the pulp and paper industry is whether the production will return to normal times. Most think that manufacturing will see signs of life before 2012, but the industry will see more automation and more globalization of supply- good for companies – bad for employees. As the economy crawls out of recession and workers return to various factories and offices and homes begin to be brought – the forecast is for more paper (copies, invoices, acknowledgements, etc.) and more containers (more consumer units requiring corrugated container for packaging) demand. But, will China, India, Brazil and Russia fill the demand for paper?

AbitibiBowater Shutters Several Mills

The Coy Paper Company Blog continues to report on poor advertising and declining publication circulation because of the current recession.,
Like many forestry companies, AbitibiBowater has been hit hard by the slump in the North American advertising industry during the recession. Most publishers have cut the size of newspapers and magazines, reduced basis weight, switched to more economical papers, and decrease print runs in an effort to survive - all leading to less paper.

AbitibBowater just announced they will indefinitely close three Canadian mills and several paper machines involving four other mills, including one in the USA.
The company is slowly releasing details, but we understand mills effected include one of two newsprint machines in Clermont, Que.; the company will idle one of the machines at its Coosa Pines, AL paper mill indefinitely. The digital printing paper mill in Beaupre, near Quebec City, will be shut down completely; and, commercial printing operation at Fort Frances, Ont., will be closed. The industry has witnessed a 30 percent drop in demand in newsprint since the beginning of the year.

Has Newspaper Advertising Seen the Bottom?

Most advertisers on "Madison Avenue" still believe the advertising community has not seen bottom yet, but see some relief starting in Early 2010. The forecast for the third quarter of 2009 is for newspaper advertising to be down 25% from 2008, and estimates are for a poor forth quarter, but something better than the 3Q2009 decline.
The Newspaper Association of America recently reported a drop in both print and digital ad revenue of 16.6% for 2008, and 2009 will be worse. Beyond the challenges print media has for advertising dollars, retailer's sluggish sales have also hurt spending budgets. Let's hope for strong Holiday promotions!

InPlant Printers Report on Paper Usage

InPlant Graphics just published a survey conducted with nearly 400 InPlant printers.
-Most common paper orders, Colored at #1, Cover Stock, Bond, Copier, Carbonless (near the bottom of the list was Inkjet Paper)
-Generally it is the Inplant Manager or Plant Supervisor that is responsible for ordering paper
-Note: most buying is by function NOT by brand name
-When asked about 'going green', most would go green BUT not if paper is more expensive
-Most inPlants ordered LESS paper so far in 2009 vs this time in 2008
-Most Inplants purchase paper through a local merchant and spent $75,000-$200,000/year on average.

Printers Report Better Profits in Second Quarter

RR Donnelley, World Color Press, Transcontinental, Cenveo, Deluxe, Consolidated Graphics and Standard Register all reported a combined second quarter profit of $122.2 million, a significant improvement over a loss of $21.2 million for the first quarter of 2009. Although this is encouraging the results are still 43% lower than the second quarter for 2008. Every company reported lower revenue, but the pace of decline has slowed.

Wausau Paper to combine business units

Wausau Paper plans to combine its specialty products business and its printing and writing business into one strategic operating unit.
The new business will be called Wausau Paper Mills LLC and will include production plants in Rhinelander, Brokaw and Mosinee in Wisconsin and the Brainerd, Minn facility. The plants manufacture printing and writing papers and technical specialty papers.
The new unit will be led by Henry Newell as senior vice president. Newell is now the senior vice president of printing and writing business.
The firm's towel and tissue business unit (produces "away from home" towel and tissue products) will not be involved with this consolidation.
Earlier this year we reported that Wausau Paper closed a paper mill in Jay, Maine, and a converting facility in Appleton in order to cut costs; these remain shuttered.

Truckers still Aggressively Compete

Transportation is a large cost component for the paper manufactures and respective end users for both inbound raw materials and out bound finished paper grades. Although, recently, signs that overall freight demand has bottomed and is picking up, the less-than-truckload market remains extremely competitive. Many of the bigger carriers continue to offer steep discounts in an effort to grab market share in the down economy.
Still, shippers think prices are going to go up over the next few months.

Struggle Continues to Sell Business Week

Bruce Wasserstein became the second bidder to depart the bidding contest for Business Week. Business Week's owner, McGraw-Hill, is concerned that the value of print media is declining.

Conde Nast Expects to Cut Costs Deeply

Conde Nast recently reported that advertising revenue at virtually every publication has decreased this year with no rebound in sight. Executives are expecting to have to cut spending by up to 25%.

Is Printed Direct Mail Dead?

The editors of Target Marketing Magazine acknowledge that the USA postal service has delivered 12billion less pieces so far in 2009, and that direct mail spending is down; and that email spending and promotions are up; and that there are environmental concerns and pressure for 'greener' promotions. BUT, they have confidence that direct mail spending will increase as the economy improves. They report that 18.8 billion promotional pieces were mailed in the second quarter of 2009 and that the spend will double by 2013. Many marketing exports argue the return on the amount invested for mailed pieces is still better than other medias, and, because the share number of emails have skyrockets, in-boxes have become difficult to manage.
There was a recent survey that revealed over 210 billion emails are sent every day, worldwide. Let’s hope direct mail returns – this is very good for paper demand.

Sonoco Stops Producing Corrugated Tubes

Sonoco has been facing significant reductions in customer orders over the past year and recently made the decision to close the Orrville, OH plant. Sonoco, founded in 1899, is a global manufacturer of consumer and industrial packaging products and provider of packaging services, with more than 300 operations in 35 countries serving customers in some 85 nations. The plant was purchased in 2007 from Caraustar Industries.

Market Pulp Price Increase Flys without Resistance

The newest pulp increase of $40/MTon from all North American NBSK producers went into effect without resistance for buyers in North America, Asia, and Europe. The industry has witnessed lower inventories, higher than expected demand, weaker dollar, and return of a strong Chinese demand. Once fully implemented, the new market list price will be $770/MTon for NBSK (a 10 month high). Note, the major buyers and large spot buyers use the list price as a bench mark for discounted levels. Spot pricing is estimated to be around $620-640/MTon.
As reported in past releases, Catalyst Paper, Domtar, Fraser Paper, Terrace Bay
and Nanaimo Forest Products have announced starting up curtailed equipment in an effort to supply the increased demand.

Magazines Review Measuring Effectiveness of Advertisiments

Mediamark Research & Intelligence (MRI) continues to penetrate the magazine industry and their advertisers to increase advertisers' confidence in the effectiveness of printed advertisements. The MRI system (called AdMeasure) assists in confirming and measuring the reach for magazines' audience.
MRI will measure consumer recall and response to an advertisement.
MRI says AdMeasure will raise print ad measurement to the level of TV and Internet ratings.

More New Paper Grades Introduced

The major paper producers are busy introducing and marketing new paper grades. Along with the Ideal and Octane product introductions we reported earlier, the NewPage mill has also offered Arbor Plus which is a #2 quality sheetfed paper containing 30% recycled fiber and many certifications. Xerox recently marketing a coat one side digital paper for direct marketing applications.
Meanwhile, Verso is now aggressively selling their Clarity Supercalendered grades to compete against the more expensive coated groundwood products. Verso is producing both Clarity A and Clarity B out of the Sartell, MN facility. The product is targeted for catalogues and offers an economic benefit to the traditional #5 groundwood coated grade.
Note, Veros earlier started to produce light weight uncoated Versobook, Versotext, and Versoblend out of the Bucksport, ME mill.

Paper Industry Pocket over $3billion in Tax Credits

The USA pulp & paper mills earned over $3billion in “black liquor” credits for the 1st half of 2009 and are expected to earn even more in 2nd half. The program is scheduled to expire at the end of the year.
A few examples include International Paper has earned $1billion, Domtar, Verso, NewPage and AbitibiBowater have each recording $100million.

Magazines Announce Management Shakeup

In an effort to generate additional revenue in this challenging market, several magazines are making many changes in management. Reader's Digest will be announcing their top management changes this week and Hearst announced several executive positions changing for both O (the Oprah Magazine) and Country Living.

Federal Reserve Reports Recession Ending

Chairman Ben Bernanke reported that the economy has started to grow once again in the current quarter. Also, many analysts predict the economy is growing in the current July-September quarter at anywhere between 3 and 4 percent.
Most of that growth should come from more spending from businesses, which had slashed investments -- often by double-digits -- during the recession.
Consumers are also beginning to spend money, as witnessed by the success from the 'cash for Clunkers' program.
Manufacturing, meanwhile, reported "modest" improvements. Residential real-estate markets, which were hurt during the downturn, also illustrating signs of improvements. But the commercial real-estate market continued to be a drag in most markets.

NewPage to Shutter Coated PM in Maine

NewPage announced they will shut a coated groundwood (publication) paper machine in Rumford, Maine for the last 2 weeks in September. The mill’s output will be reduced by 6,000 tons.

Analyst Comments of Poor Newspaper Advertising Recovery

Wells Fargo researchers recently commented on a potential advertising recovery in third quarter.
The Wells Fargo team said ad revenue has stalled in August while September appears to be starting off weak. Specific focus was on the Gannett Group, a bell weather for the Newspaper industry.

Wells Fargo reduced its Q3 newspaper advertising revenue estimate for Gannett from a decline of 25.5 percent to a decline of 28.8 percent. Local is forecast to fall 22.5 percent, national is anticipated to drop 21 percent and classified is estimated to decrease 40 percent (versus a previous -19 percent, -18 percent and -37 percent respectively).

Overall advertising revenue is expected to fall 20.2 percent in Q4, revised down from a decline of 16.9 percent.

Update on Pulp Markets

As noted in our past releases, the entire pulp market has increased the price of pulp - both softwood and hardwood. If this $40/ton price goes through, and we think it will, the new NBSK 'list' price will rise to $770/mton in USA and $740/mton in Europe, and $650/mton in China. Reports outline the spot transaction price in USA for NBSK will go to $585-615/mton. Producers such as : Catalyst Paper, Domtar, and Fraser Paper, have all announced pulp mill restarts.

Kraft Market Showing Improvement

The Kraft Paper producers in North America have announced a $40-50/ton price increase. The manufacturers report recent strength in order backlogs, a pop in raw materials costs,
capacity curtailments, and the recent weakening of the dollar have all strengthen the market. .

Curtis Mill Purchased

Georgia Pacific and International Paper jointly purchased the old Curtis Mill in Milford, NJ and will clean up the site. The mill produced 175TPD of waxed cereal bag liners.

Brazil's Pulp Market Shows Strength

Brazilian pulp industry is starting to recover from the weak global demand for pulp and paper products, according to Wood Resources International (WRI).
In April, pulp exports equalled 766,000 tons, up 43 percent from the previous month and 140 percent higher than shipments a year earlier, WRI said in its Wood Resource Quarterly report.
The Brazilian pulp companies have benefited from closures of pulp mills resulting in reduced production capacity in the Northern Hemisphere and an increase in demand for pulp in China
Production reached 12.8 million tons, which was up from 11.8 million tons in 2007.

More on Coated Market Pricing

Most of the major producers of both coated free sheet and coated groundwood publication papers state the rate of decline in demand has slowed over the past few months. As reported earlier, Verso and NewPage have taken this opportunity to introduce price increases of $40/ton on Coated Free grades and an attempt to reduce discounts and increase transaction prices of $20/ton is solidly in the market for the publication grades.
The mills have experienced increases in input costs such as pulp and energy, also inventories levels have declined. Our read is the industry has a good chance of increasing transaction prices for coated papers - but may require market related curtailment of capacity to control supply.

All Major Mills Increase Newsprint Price

As a follow up to our earlier report, all of the major North American producers of Newsprint have now joined in announcing a price increase of $70/metric ton. The industry has really been licking its wounds, with a low market price in August of $470/metric ton - now mills such as Kruger, White Birch, Catalyst, Norpac, and Tembec have joined AbitibiBowater with the increase.
These mills make up 9.6 million metric tons of capacity.
All are introducing the price in two increments (September / October in East; October/November in West)

Georgia Pacific and International Paper jointly purchased the old Curtis Mill

Georgia Pacific and International Paper jointly purchased the old Curtis Mill in Milford, NJ and will clean up the site. The mill produced 175TPD of waxed cereal bag liners.

Box Company to Pack Up and Leave

Smurfit-Stone Container Corp., a Missouri-based company, is planning to close its box manufacturing plant in Portland, leaving 93 people unemployed.

Coated Paper Price Hikes Attempted.

Verso announced $40/ton Coated Free Sheet price increase for shipments after September 15. NewPage followed this announcement and added a $20/ton hike on their coated publication grades. Many buyers were surprised. The market is still experiencing overcapacity. Perhaps, the shuttered equipment has created a shortage of supply to yield a tightening availability?

New Magazines to make debut

Although we generally report on the poor health of the magazine industry, a few recent magazine launches include: Afar, 944 Media Atlanta and Detroit, Port City Life as Maine, Bi-monthly UFC, Energy Efficiency & Technology, Healing Lifestyles & Spas , Vitamin Shoppe’s publications Amazing Health and Muscle & Performance. We wish them good luck in this challenging climate.

NewPage will Produce Uncoated Grades

NewPage Corporation, once 100% coated papers, will expand it's uncoated offering with two new products, Octane and High Octane.
Octane is an 80 bright, uncoated mechanical paper produced in Whiting, Wisconsin and is engineered for both heatset and coldset printing applications and has a standard offering in 35 lb., 38 lb., 40 lb. and 45 lb.
High Octane, an 84 bright, uncoated freesheet paper produced in Rumford, Maine is manufactured for heatset presses in a range of basis weights from 35 lb. to 45 lb.

UPM and Xpedx Ink Deal

UPM signed a multi-year agreement with Xpedx on distributing selected coated paper to commercial printers in the US and Canada. The paper will be available through all Xpedx distribution outlets and is ensured with PEFC or FSC standards.

Freedom Communications Becomes Statistic

Freedom Communications, who owns The Orange County Register of California and 30 other dailies, filed for bankruptcy. Under reorganization, 26 secured lenders will take over. Owners: the Hoiles family, Blackstone and Providence Equity will have equity stakes reduced to 2%.

Update on the Kraft Paper Market

The Kraft industry is witnessing increased demand in Kraft Paper and therefore the $40-50/ton price advance announced by major USA producers is gaining traction. Back logs have expanded from a few days to weeks.

Update on Market Pulp

We continue to report on the strength of the pulp markets, and this week is no different. All the major NBSK and hardwood producers announced $40/ton price increase for September. This will be the fourth consecutive price hike in North America and the fifth in Europe, and sixth in
Asia. Reports in the USA for spot transactions reveal NBSK price rose to $585-615/mton. The increases are a result of reduced inventories, continued strong demand in China, and increase in USA demand.
We also note, manufacturers such as Catalyst Paper, Domtar, and Fraser Paper have announced mill
restarts.

Update on Uncoated Woodfree Paper

It appears the recent announcement by the major North American producers for uncoated woodfree papers ( offset and commercial printing grades) for $40/ton is taking hold. This increase, effective with September shipments, excludes cutsize paper and converting grades. The primary factors supporting the higher paper prices include higher pulp prices, increased demand, and lower mill inventories from extensive curtailments and reduced imports.

Newsprint Advertising Down

According to the Newspaper Association of America, print ad sales plunged by more than 30% in the second quarter from a year ago, the worst decline on record. It's also steeper than the 29.7% drop registered in the first quarter -- which had been the worst decline on record.

A recent survey by MORI Research indicated "newspaper advertising remains the leading advertising medium cited by consumers in planning, shopping and making purchasing decisions." The research concludes that when the economy eventually begins its recovery, advertisers will return to spending, and newspapers will find themselves extremely well positioned to harness the strength of their print and digital platforms to build a brighter future. Let's hope this survey is right, for the sake the paper industry and the future of newspapers.

Coupons Arrive to Cell Phone

The newest marketing initiative is mobile coupons. Several new companies have emerged that are forwarding relevant coupons to folks that opt in to programs to electronically (via Smart Phone) receive coupons. This is becoming a growing feature and advertisers such as Kmart, Thyrsus, and Zales confirm the redemption rate is 15-20% (versus 1% for printed/ paper coupons). Another nail in the coffin for Free Standing Inserts and Paper.......

USPS Predicts Mail Volume will return

The United States Postal Service is forecasting that once the recession ends marketers will be back mailing promotions and corporations’ will be mailing invoices. The service has been in trouble, current 2009 estimate is for deficit for USPS of $7Billion and mail has been trending down – 2006 – 213billion pieces, 2008-202billion pieces and 2009 estimate is 175billion pieces. The Postal Service believes the biggest culprits include 70% of households with computers now pay bills on line; electronic mailing of tax returns; and a big campaign for ‘less paper is greener for America’. Also, recently, marketing for direct mail including credit card offers and bulk advertising is way down. Another challenge is the increase of communication through smart phones and not mail.
With knowledge of all these challenges, USPS feels printed advertising is more powerful than electronic communication and marketers will return once the economy improves. Less mail means a lot less paper!

AbitibiBowater Raises Newsprint Prices

AbitibiBowater is beginning to inform end users that they will implement a $70/ton newspaper price increase in two stages. The first is a $35/ton hike on Sept. 1; followed by another on Oct. 1.

The pulp market Continue to Increase thanks to China

2009 has yielded many challenges for the Paper producers; summarized by limited success in holding, much less increasing prices. Newsprint producers have seen their prices drop to cash costs -mainly due to pressure from poor demand. While demand has not been stellar, the uncoated freesheet and packaging producers have maintained significantly better margins and are now looking at price increases for the Fall.
Pulp pricing, the basic raw material for all paper, has recently witnessed price increases and extended backlogs. The Chinese market has really assisted improved pulp demand.

Packaging Companies Downsizing

In a recent survey by PFFC, distributors for unprinted rolls and sheets reduced their workforce as well as converters of Tags, labels, and tapes as well as paperboard packaging and will not rehire until several months on increased orders are actually on the books.

AbitibiBowater Plans to Restart Paper Machine

AbitibiBowater Plans to restart the #6 paper machine in Fort Frances, Ontario for 3 weeks. If more orders are received, they may run it longer.

International Paper and Glatfelter Announce Paper Price Increases

IP and Glatfelter announced a $40/ton ($2/cwt) price increase on uncoated freesheet offset and commercial printing papers, effective with September shipments.

Printer's Sales Remain Down

Printing Industries of America states 1Q2009 printer sales down average of 9.4%. BUT, digital segment up 8.8%; Inkjet up 7.1%.

Update on Kruger's Coated Production

Kruger will permanently shut down coated production at its Trios River Mill in October. 3 paper machines and 2 coaters are included in the shut down.

Wausau Announces Price Increases

Wausau will increase the transaction price by $2.00/cwt. on the following products:
Exact® Index
Vellum® Bristol
Exact® Tag
Exact® Opaque Colors
This is effective with late September shipments.

Neenah and Cranes Announce a Partnership

Neenah Paper Company and Crane & Co. Inc. announced they have signed an exclusive partnership agreement for Neenah to manufacture, market and distribute Crane's fine business paper brands: CRANE'S CREST®, CRANE'S BOND®, CRANE'S LETTRA®, CRANE'S PALETTE(TM) and CRANE'S® Choice Papers.

Doubledown Unable to Sell Magazine Assets

We reported on Doubledown (a publisher of magazines aimed at the Wall Street elite) going out of business in February and filing for Chapter 7 bankruptcy. Updating that release,
an auction was recently held for Doubledown Media assets and most minimum bids were not met.
Examples include; the minimum bid for Doubledown’s Dealmaker was $100,000. For Corporate Leader and Trader magazines the lowest acceptable bid was $50,000. The minimum bid for Cigar Report was $25,000.
The minimum bid for all five titles was $300,000.
None of the auctions were successful – all bids too low!

A Few Optimistic Positions on Paper ....

It appears the Pulp, Containerboard, and Uncoated Wood Free papers may see some relief and gradual improvement. In the past few weeks all three markets have stabilized, and in fact, Pulp and uncoated papers has actually witnessed price increases.
Although Containerboard has not enjoyed increased demand, the price levels appears to have stabilized. This has been largest assisted by massive curtailment of supply (see my past reports on Smirfit and International Paper downtime).
Pricing for uncoated papers are enjoying modest increases in transaction prices. In fact, the major producers have formally announced a September price increase of $40/ton for Offset, Opaque and Bristol grades. Many in the industry are forecasting the deep discounts will go away and the true effect of the September increase will really be $60/ton.

SAPPI Closes Paper Mill ' forever'

One of the largest producers of paper for magazines, books and high-end advertising, Sappi, North America, will permanently close the Muskegon, Mich., paper mill. I reported in March that this mill will be idled for an undetermined amount of time. This coated fine paper mill had an annual production capacity of 170,000 TPA.
The global economic downturn and reduction in demand of 32% this year has resulted in very weak demand for coated fine paper worldwide.
Products previously made at Muskegon have been and will continue to be produced at the other Sappi mills in Skowhegan, Maine, and Cloquet, Minn.

Portugal Paper Mill Studying New Machine

Portugal’s largest pulp and paper company, Portucelis, is considering expanding in the paper market at a time when larger rivals are cutting production.
The machine will have a capacity of 500,000 tons a year, making it the world’s biggest for the production of office and graphic paper. It will increase the company’s total paper production capacity to 1.5 million tons a year.

Big 3 Paper Producers in Europe Speak about Consolidation

From Reuters Wire Service
At Reuters Paper & Packaging Summit, Chief Executives from UPM, M-Real and Norske Skog spoke about the need for consolidation in the paper industry. UPM stated that they would be an active player, focusing on costs and balancing demand-supply.

Vibe Magazine to Return

As we reported in May/June, Vibe Media Group closed their doors, blaming the poor economy and a decline in ad spending. Vibe and Vibe.com recently announced that InterMedia Partners, a private equity firm founded by Leo Hindery, Jr., purchased the publication.
InterMedia is combining Vibe with the operations of another urban lifestyle magazine it owns, Uptown.

Catalyst Paper to Restart Pulp Mill

Catalyst will restart pulp production at its Crofton NBSK kraft mill on Vancouver Island, BC in October if market conditions continue to improve. The line will add 210,000 TPA.

Palm Paper's Newsprint Machine Starts up

The industry’s newest paper machine started up three weeks ahead of schedule. Palm Paper’s facility, on the River Great Ouse in the UK, will produce up to 400,000 tons of newsprint paper each year.

Reader's Digest Officially Files

As we reported late last week, Reader's Digest was evaluating a move to file for bankruptcy. This just became official. The filing will assist in reducing the $2.2billion in debt to $550million.

Another Reason for Fewer Newspapers

Just reading a piece from Jeff Jarvis (past editor of NY Daily News) and he outlines the fact that coupons are now available on line for free and listings for movies are now easily attainable online - this has hurt newspaper demand. He believes there was a large population that purchased newspapers for only the coupons. Many would also purchase a newspaper for the local movie listings – all now available online – for free. Certainly, two more factors leading to fewer newspapers is less disposable income for purchases such as a newspaper and electronic news seems to be picking up readers.

Pulp Shipments continue to Increase

Perhaps the only shinning star in the industry is market pulp; whereby, reports for July shipments confirm an increase of nearly 4% from July of 2008. China continues to buy pulp and is certainly assisting the demand.
Worldwide inventories have decreased and we hear pulp is now under 30 days (versus 36 days at this time in 2008). Pulp prices are witnessing increases as a result from companies such as Canfor Pulp, Domtar, Aracruz, Suzano, Arauco, Botnia, Donghae Pulp, Mercer Intl, Tembec, VCP, Sodra, West Fraser and Winstone (price inceases ranging from $30-50/ton).

Is Digital Better?

I just saw an interesting report on the International Paper website comparing the ‘green’ factor of digital / electronic media and traditional paper. The document confirms paper being more environmentally friendly.
A few highlights
-Sustainability – Paper industry plants 3 trees for every one forested – trees are renewable. Computers are made from environmentally unfriendly materials that cannot be recycled.
Energy – Most paper producers today have power supplied from carbon neutral resources. Powering up a PC comes from electricity, which is produced from nonrenewal fossil fuel.
Recyclability – Paper is completely biodegradable and the paper industry recycles and reuses nearly 60% of paper that has been returned from the market. Computers, servers, cables, and monitors continue to end up in landfill......and are not recyclable.

Update on Newsprint Market

Difficult for me to report an optimistic future for the Newsprint Market. I suppose one glimmer of bright light is that the balance of the world has not experienced as deep nor as fast a decline in Newsprint demand. Newspaper advertising in the USA continues to fall, and the trend does not appear to be stopping (FYI, advertising down 30% in the first quarter alone!).
USA newsprint demand for 2009 is forecast to be 5.3million tons. Production for North American producers was 10.4million tons in 2008 - the forecast 2009 is 7.6million tons.
Individual companies are particularly hurt; AbitibiBowater (world's largest producer of newsprint) lost $100/ton on its current shipments. Mr. Mark Wilde reported average selling price was $581/mton, while AbitibiBowater's average cost of manufacture was $688/mton. Note, larger buyers are reported to actually be purchasing paper at less than $400/mton. Again, not a rosy picture!

Market Pulp Prices Continue to Increase

Pulp prices in North America continue to increase with the latest announcements for NBSK list price in August heading north for the third month in a row, up $30/ton to $730/ton.
Currently, this market is witnessing reduced inventories - given strong demand from China and shuttered equipment reducing over all capacity.
Note, SBSK list price also increased $30/ton to $680/ton

More College Students Using Digital Texts

Notes from a report by Jim Milliot of Publishers Weekly

Many anticipate that 40,000 college students at over 400 colleges will use open source digital textbooks from Flat World Knowledge this fall. Flat World went live in spring 2009 with 1,000 students from 30 colleges using its offering.
The Flat World’s pricing/business model students allows access entire textbooks for free online; pay $19.95 for a PDF download; pay $29.95 for a black and white printed version or $59.95 for a color version, or pay $39.95 for an audio version. Books are available by the book or by the chapter. Study aids or also available for purchase.
Eric Frank, a cofounder of Flat World believes a quantum leap will occur for fall 2010 when he thinks the number of students could be between 120,000 to 200,000.
If more books are read digitally, this means less text paper sold ..... another challenge for the paper industry.

Hewlett Packard Concerned less People Printing

Hewlett Packard just reported a significant decline in ink cartridge sales. The challenging economy has resulted in massive layoffs and therefore fewer office workers producing printed copies. HP is evaluating a new environment upon which corporations are reducing costs and asking workers not to print unnecessary documents. This could be long lasting as the world is becoming increasingly more comfortable with digital documents.
Note, HP printing group accounts for nearly 25% of the total corporate revenue.

Several Shuttered Reed Publications back to the Presses!

Recall that Reed Business Information closed 13 publications in April and this week, John White announced his company will acquire these titles White will re-launch all by September, published under Associated Construction Publications Group (ACP), expecting collective revenue of $5 million in 2010.

Recycled PaperBoard Pricing 'on the move'

The industry just announced price increases for September shipments of $40/ton for all grades of coated and uncoated recycled paperboard by nearly all major North American producers to offset raw material cost increases. These producers include Strathcona Paper, Graphic Packaging, RockTenn, Sonoco, PaperWorks Industries, Caraustar, Newark Group and Ox Paperboard. Challenge is two fold - demand remains poor and most end users can not pass an increase through to their respective end users. Lots of resistence here .......

New Paper Mill in South Korea

Moorim announced a new Voith Paper paper machine to their DongHae site to manufacture woodfree coated, woodfree uncoated and machine finished coated paper with an annual capacity of 450,000 tons. This will be the 1st integrated pulp & paper mill in South Korea and is scheduled for start-up in spring 2011. It will be environmentally friendly, using the steam incurred during pulp production instead of fossil fuels.

Stora Enso to Shrink Workforce

In past releases, we had reported that Nordic paper companies experienced losses at the end of last year given slow demand from customers for newspapers and magazines. This year has not proven to yield any improvement and total production in the forest sector has slumped by some 30 percent.
On Finnish company, Stora Enso, will now lay off off up to 1,100 workers, cut production and close mills in Finland as the paper maker continues to struggle with dwindling revenue.
Stora Enso is one of the world's largest forest product companies making magazine paper, newsprint, fine paper, pulp and packaging boards.

Many Pulp, Paper and Board Companies Show Improvement

The Pulp & Paper Week publication just reported most US pulp and paper companies had higher earnings in the second quarter vs. first 3 months of this year. Lower input costs certainly assisted, but a major factor was from alternative energy black liquor credits (+$1.6 billion), which offset losses.

It's Chapter 11 for Reader's Digest

Household publication, Reader’s Digest, will restructure to reduce it's debt under a voluntary Chapter 11 filing. This will only affect their US businesses. The senior lenders will exchange much of their debt for equity.

Financial Times will charge per online Article

Financial Times, which has charged a fee for online news since 2002, announces model to accept 'micropayments' for individual articles. Many of the major newspapers are now reviewing models to generate revenue beyond online advertising as reported in past releases. Currently, most newspapers do not charge for online news.

July Paper Shipments look Promising

The American Forest & Paper Assn.just published the preliminary report for printing and writing paper shipments in July. The report outlined 1.464 million tons, down 15% vs. July of 2008, but up 5% vs. June 2009.
Results as follows-
Coated mechanical: 258,939 tons, down 19.1% vs. 7/08 and down 3.7% vs. last month.
Coated freesheet: 281.964 tons, down 16.2% vs. 7/08 and up 13.6% vs. last month.
Uncoated mechanical: 142.418 tons, down 25.1% vs. 7/08 and up 15.5% vs. last month.
Uncoated freesheet: 780.238 tons, down 11.2% vs. 7/08 and up 3.2% vs. last month.

Online Spending declined

Like printed advertising spending, online retail spending is starting to decrease. On line spending totaled $30.2 billion in the second quarter, a 1% decrease from $30.5 billion in the prior year. All advertising dollars are effected by the nearly 10% unemployment rate, rising gas prices, and consumers attempt to increase savings, - all contribute to reducing consumers’ discretionary spending.

Newspapers to soon charge for News on their websites

The Boston Globe and Herald as well as News Corporations’ New York Post and Times of London has announced it will start to charge end users to access their websites for news. All newspapers are aggressively seeking additional revenue.

Is the Economy bottoming out?

It is said the paper industry still follows the economic indicators, so it was good news to hear the Federal Reserve stated that the US recession was ending, due to consumer spending, financial markets and corporate inventory building stabilizing. The Fed cautioned that it would be a slow recovery and that they will keep short-term interest rates at virtually zero. Many economists believe we will not see any continuous signs until beginning of 2010.

Fraser Papers Will re-Open Pulp Mill

Reversing a news release we published earlier, Fraser and their union forged an agreement, which will allow Fraser to reopen the pulp mill in Edmundston, New Brunswick, Canada by the end of August.

In-Plant Printers Report on Recession

The MindFireInc just reported on results from a survey which included many of the In-Plant printers. During these difficult economic times, survey results reported-
-Two biggest challenges for the printers included reduced budgets and difficultly attracting new business.
-Most believe that ‘things will get worse before they improve’
-All agreed that to grow revenue requires new services, self promotional marketing, adding new equipment and visiting end users.
-When asked about reducing costs, all reported they would renegociate prices with suppliers, cut internal staff, and change suppliers

Paper Companies are beginning to Report Results

The USA paper producers are beginning to report results for the second half of 2009, and most are announcing losses.
-Cenveo reported quarterly net sales of $397.6 million, down from $524.5 million for the same period last year. Cenveo recorded a net loss of $18.3 million
-NewPage, USA largest producer of coated papers, net loss of $6 million in 2Q was an improvement over the $21 million loss in 2008,
-AbitibiBowater reported a net loss of $510 million in 2Q, double 2008. Sales only $1.04billion.
-Domtar Inc. turned a net profit in its second quarter
-UPM-Kymmene Corp. , the world's largest magazine paper maker, reported a second-quarter net loss of euro8 million

Time Magazine closes Southern Accents Magazine

The Southern Accents magazine issue will print the final issue with the September/October edition. Time Inc., publisher of the magazine, announced advertising pages had declined by 37.4% in the first half of 2009. This magazine was a bimonthly with a circulation of 400,000.

AbibtiBowater Shutters 2 more machines

AbitibiBowater will shut down 2 more machines, both at the Thunder Bay, Ontario mill. Paper machine #4, which produces 146,000TPA of uncoated mechanical paper (publication), and #5Paper Machine , a 250,000TPA newsprint machine. Both will remain down until the markets improve.

Update on Market Pulp

Notes from report by Deutsche Bank
North American NBSK list price rose for the second month in a row by $40/ton to $700/ton. This increase resulting from worldwide inventories for market pulp having declined, producer downtime and closures, as well as strong demand in China .
Local producers that have announced increases so far include
Canfor, Domtar, Northern Pulp, Tembec, and West Fraser slated domestic NBSK prices at $730/ton.
Other North American producers that have announced a $20-25/mton price hike on key hardwood grades include Alberta-Pacific, CENIBRA, Sappi NA, and VCP.
Meanwhile, in Europe, Botnia, Mercer Intl., Stora Enso, and Sodra have announced a $30/mton price hike on NBSK and hardwood grades.
Note, even spot price levels are expected to increase from the $560-590/ton net delivered from the July prices.

Market update on Containerboard

Containerboard prices, assisted with good demand, remain steady after falling $70/ton since its peak, last fall.
Note, it has been reported that spot prices for 42-lb linerboard range from $450-470/ton in Central US, and $410-440/ton in the Northeast region. Recycled spot prices are below $400/ton. US kraftliner export prices are still around the $320/ton FAS level.
I think these spot prices have remained constant for last 60 days, as well. (I welcome comments here)
Additional comments
-June box shipments down 6.5% from 2008
-Producers continue to streamline inventories and operating rates
-International Paper took 580,000 tons (21% of capacity) containerboard out during second quarter.
-Renew will restart 500TPD linerboard in St Francisville, LA

AbibitiBowater cuts Staff and Sells Timberlands

AbibitiBowater, North America's largest newsprint supplier and operating under chapter 11, reported it will eliminate 25% of its employees in its headquarters as well as sell $25.7million worth of timberland These are part of the $100million cost reduction plan we announced in previous release on this blog.
Meanwhile, Smurfit - Stone Container - another bankrupt company, will sell 1million acres of timberland.

More Downtime for Kruger

Kruger will reduce production at both its Trois-Rivières and Wayagamack mills for balance of this summer. Trois-Rivières will reduce coated paper production by approximately 7,500 tons and Supercalender Paper will be reduced 4,500 tons. Directory paper will be cut 2,000 tons at Wayagamack; note, coated manufacture at Wayagamack will not be affected.

Magazines Report less Sales at the Newsstand

Single copy sales for magazines sold at newsstands are predicted to be down for first half of 2009 (ABC audit not confirmed until late August). While some of this decline is a result of our poor economy, the majority resulted from publishers’ refusal to pay the increase for ‘per copy’ fees the distributors’ demanded. Statistics on specific magazines will be announced in coming weeks.